A breakdown of money supply, according to sources, rather than on the basis of components, reveals that net bank credit to the government has increased by
Rs 23,667 crore despite a Rs 6,102 crore dip in net RBI credit to the government
The upward trend in the aggregate deposits of the banking system continued with an increase of Rs 2,292 crore in the first fortnight of August.
During this period, the investment portfolio of the banks grew by Rs 3,141 crore, while bank credit recorded a decline of Rs 1,022 crore.
As on August 15 aggregate deposits of the banking system stood at Rs 5,28,455 crore, the investment portfolio at Rs 2,21,700 crore and bank credit at Rs 2,76,535 crore.
The three crucial banking indicators, credit deposit ratio, investment deposit ratio and the cash deposit ratio, stood at 52.33, 41.95 and 10.38 respectively.
Reserve money recorded a negative growth of 2.1 per cent in the second week of August. Despite this slump, the growth in reserve money in the current financial year has been 1.2 per cent.
During the corresponding period in the last financial year reserve money had recorded a negative growth of 1.3 per cent.
The negative growth in reserve money in the second week of August is on account of a Rs 5,042 crore decline in net RBI credit to the government and a Rs 4,335 crore dip in bankers deposits with the apex bank.
The year on year growth in reserve money is estimated at 5.5 per cent. Consequently there has been an increase in money supply (M3).
The year on year growth in money supply is 16.4 per cent, while the growth in the current financial year till August 1 was 4.5 per cent.
In fact, in the second fortnight of July money supply grew by a paltry 0.1 per cent.
In the current financial year money supply has increased by Rs 31,445 crore. Contributing to this increase, has been a Rs 27,662 crore rise in time deposits with the banks.
A breakdown of money supply, according to sources, rather than on the basis of components, reveals that net bank credit to the government has increased by Rs 23,667 crore despite a Rs 6,102 crore decrease in net RBI credit to the government.
As already reported, total foreign exchange reserves have touched $30,212 million on August 21.
While foreign currency assets increased by $251 million to $26,404 million; Special Drawing Rights increased by $54 million to $78 million. There was no change in the stock of gold which remained at $3,730 million.
On the interest rate front, while there has been a continuous decline in the yields of the 364-day treasury bills, the interest rates on commercial paper has, however, increased from 7.3-12 per cent in the second fortnight of July to 7.8-14.2 per cent in the first fortnight of August.
Figures released by the Reserve Bank of India, albeit dated, reveal that the interest rates on certificate deposits have remained in the region of 8-14.3 per cent.
The reliance of banks on certificate of deposits has gone down from Rs 11,037 crore as on May 23 to Rs 9,177 crore by June 6.
